The Australian dollar (AUD) gained 0.64% on Tuesday, as the U.S. dollar was weakening on fuelling expectations that the Federal Reserve (Fed) has finished hiking interest rates.
Possible effects for traders
AUD is a risk-sensitive currency. Therefore, AUDUSD tends to rise when the market expects the end of monetary policy tightening and turns optimistic on global growth prospects. Indeed, the pair has risen by almost 6% over the past month and is trading near a four-month high. Moreover, Reserve Bank of Australia (RBS) Governor Michele Bullock highlighted the growing influence of domestic demand on inflation, necessitating a response through increasing interest rates. Currently, markets are pricing in about a 50% chance of the central bank increasing the base rate next year. However, the bullish trend in AUDUSD has paused due to bulls closing their long positions ahead of a strong resistance near 0.66800 and a faster-than-expected slowing of domestic inflation.
AUDUSD fell during the Asian and European trading sessions as the latest Consumer Price Index (CPI) indicated a slowdown in inflation. CPI numbers were lower than expected in October as goods prices fell, and core inflation also declined. The data increases the chances of the RBA leaving the rates unchanged at next week’s meeting. Today, traders should monitor the U.S. GDP Growth Rate report at 1:30 p.m. UTC. If the figures are higher than expected, AUDUSD will likely decline towards 0.66000. However, the upward trend could persist if numbers come out below the forecast.
 gained 0.64% on Tuesday, as the U.S. dollar was weakening on fuelling expectations that the Federal Reserve (Fed) has finished hiking interest rates.){kind=link}